OCC 2001-28
OCC BULLETIN

Subject:      Assessment of Fees; Special Examination of Third
              Party Service Providers
Description:  Final Rule

Date:         June 22, 2001

TO:    Chief Executive Officers of All National Banks, Federal
       Branches and Agencies, Department and Division Heads, and
       All Examining Personnel

The attached final rule concerning the assessment of fees for the
examination of third party service providers was published in the
Federal Register on May 8, 2001.  The effective date of the rule
is June 7, 2001.

The Office of the Comptroller of the Currency (OCC) is amending
its assessment regulation to state that the OCC has authority to
charge a national bank when the OCC conducts a special
examination of a third party that provides services to the bank.
The rule applies in the same way to a District of Columbia bank
and to a federal branch or agency.

While banks have historically used third parties to perform
certain activities, payment processing for example, some banks
are entering new lines of business or introducing novel and
potentially high-risk new products, relying substantially on
third party service providers to enable the bank to participate
in or to conduct those activities.  These include, for instance,
certain types of credit card programs, "payday" lending, check
cashing, and other specialized types of lending.  In many
instances, the interest of the service provider in transactions
it originates is significantly greater than that of the bank.
This increased reliance on service providers will result in an
increased need for the OCC to examine or investigate third party
service providers in order to evaluate the effect that third-
party activities and relationships have on the safety and
soundness of the bank.

The OCC will not impose this fee after every examination of third
party servicers.  Rather, the OCC will charge a special
examination or investigation fee when examination or
investigation of the activities of a third party service provider
is warranted by the high risk or unusual or novel nature of the
activities conducted by the service provider for the bank, or
when the OCC believes that the bank has insufficient systems,
controls, or personnel to adequately monitor, measure, and
control the risks associated with the activity.  The OCC will
inform the bank, when commencing a special examination or
investigation or expanding another investigation, when the OCC
expects to charge a special examination or investigation fee.

For further information, contact Mitchell E. Plave, counsel,
Legislative and Regulatory Activities Division, (202) 874-5090.


____________________________________
Julie L. Williams
First Senior Deputy Comptroller and Chief Counsel

Attachment: 66 FR 23151:
        [http://www.occ.treas.gov/fr/fedregister/66fr23151.pdf]